Three persons jailed for insurance fraud offences

Two men and a woman convicted of conspiracy to defraud were sentenced to imprisonment ranging from three years and eight months to five years at the District Court today (September 6)

The court heard that the two male defendant, aged 32 and 37 respectively, and the 38-year-old female defendant ran three insurance brokerage companies between July 2001 and August 2004.

Two of these brokerage firms introduced clients to two insurance companies. In return, these insurance companies would pay them commission ranging from 100 to 138 per cent of the annual premium.

The brokers were under a written contractual obligation to return or "clawback" a specified percentage of these commissions if the policyholders stopped their premium payment within specified periods ranging from 13 to 19 months of the policy subscription.

Since the commencement of the scam in 2001, some 1,600 new clients were introduced through the brokerage firms. However, almost all of the new policyholders gradually ceased to pay premium payment starting from the first premium due date.

Between April and November 2004, both brokerages stopped operations and did not pay the clawback fees of about $5 million to the two insurance companies.

Police Commercial Crime Bureau (CCB) took over the investigation and revealed that the insurance policies in question were often given away as free gifts, prizes in lucky draws or as staff benefits. To this end, the premium of the "clients" was in majority settled by the brokerages and the insurance companies were kept in the dark.

After in-depth investigation, CCB officers arrested the three defendants in November 2004 and they were charged with conspiracy to defraud and using false instruments.

They were convicted at the District Court on August 30, 2006 and the sentences were handed down today.


Police Report No. 8
Issued by PPRB

Ends/Wednesday, September 6, 2006